tv Tonight From Washington CSPAN May 22, 2013 8:00pm-11:01pm EDT
at a time of great disaster here and that was a bad experience and we certainly have a help in this community in 1999. i have issa the american people were there for us and we need to be there for the american people and i think i can -- most of my colleagues feel that way. i have got more texts from both sides of the aisle on this than in my entire career combined and there is not a big division or a debate over this so my intent is to not let you know washington difference of opinion or something that happened monday affect what we can do now and again i think that is the mindset and i know that is what the president wants to do. that is what the speaker wants to do so those two can work together i guarantee you the rest of us can follow and that is the jackley what we intend to do. >> thank you all.
>> thank you very much. treasury secretary jack lew defended his handling over the internal revenue investigation. that's next on c-span2. >> all year experiences at boston college none is more meaningful of course than the education you have received here. you see education is transformational. it literally changes lives. that is why people work so hard to become educated and that is why education has always been the key to the american dream. the arbitrary divisions of race and class and culture and unlocks every person's god-given potential. as john f. kennedy once that all of us do not have equal talent
but all of this should have an equal opportunity to develop our talents. now treasury secretary jack lew testifies about the implementation of new financial regulations. he is also questioned about his knowledge of the iras targeting of conservatives groups. this house financial services committee is chaired by congresswoman deb hensarling. >> that committee will come to order without objection. the chairs authorized to declare
a recess committee in a time. the chair now recognizes himself for five minutes for an opening statement. this morning we welcome treasury secretary jack lew for his first appearance before the financial services committee. today the secretary is here to present according to statute the third annual report of the financial stability oversight counsel or fsoc. the fsoc is an amalgamation of regulators heading agencies that either help cause the financial crisis or were largely negligent in preventing it in the first place notwithstanding they had the regulatory power to do so. yet we know the root cause of the crisis was not deregulation, it was regulation. the federal policies incented institutiinstituti ons to loan money to people to buy homes that ultimately they could not afford. this dramatically eroded
historically prudent underwriting standards of the sub-prime and alter a mortgages that led to the financial crisis more than 70% sent back by the federal government from fannie mae and freddie mac the fha and other programs speaks for itself. in many respects as we examine fsoc the regulators that helped precipitate the last crisis are now put in charge of preventing the next. according to the general accountability office after three years they don't have much to show for it. last month we received testimony from the gao that fsoc is still quote not developing a structure having a comprehensive process for identifying potential emerging threats yet afsoc has been granted sweeping new powers within our economy and this is disconcerting to many. because as we now on occasion
regulators may not just be. they may not just be negligent. they may actually be criminal. just down the hall as we speak house oversight and government reform committee is holding a hearing where according to her attorney atop eire finished lois lerner is pleading the fifth for having an irs division which trampled on the upon the first. the american people are appalled and the most feared government agency has been permitted to attack their most sacred rights, the american people are appalled at the arrogance of the agency and they are appalled by this abuse of power. and for the last two and a half months and for the foreseeable future this agency, the irs, just like fsoc reports to you mr. secretary. although the irs is clearly accountable to you the consumer
financial protection bureau and the office of financial research to agencies which are part of fsoc are not. needed that bureau nor the financial research office answers to anyone. the single director who cannot be removed by the president at will. spending by both agencies is unaccountable to congress or the administration. neither is bound by the constraints of the government pay scale in both agencies have subpoena power. something else both these fsoc agencies have in common is that they are engaged in gathering massive amounts of information about private american citizens. at the same time the irs thanks to its enforcement powers that it aimed with obamacare is building the largest personal information database the government has ever seen. his cfpb is monitoring how millions of americans interact with their leaders and the ofr is working together with enough
information in its computers that would equal all the data held in all the u.s. academic research libraries you can find. this is big data for big brother. as the iras and/or mines is the freedom of every american is in danger when a government agency abuses its power and misuses the sensitive information entrusted to it. in light of the recent scandal this is appropriate time to remind everyone that our committee maintains on its web site a confidential way for americans to report evidence of abuse of power by the federal agencies under our jurisdiction. we encourage all concerned and informed citizens to use it. secretary lew we look forward to discussing these issues and many others with you today in detail and at today's hearing. i at this time on our denies the ranking member for purposes of an opening statement for two
minutes. the gentlelady is recognized. >> thank you very much mr. chairman. i welcome secretary lew to the first appearance before the senate financial committee to deliver the annual report of the financial stability oversight counsel as required by the dodd-frank act. we are aware of your tremendous responsibility. we are we are very pleased that you were confirmed and many of us look forward to working with you to ensure that you are able to do the best job possible. as the council notes in its report despite positive developments in 2012 the housing market remains in nay in the foreclosure crisis continues to weigh heavy on our fragile economy however mortgage lenders poor standards have yielded ongoing court challenges slowing the process and leaving millions of homeowners in limbo as they contend with the inadequate government programs. realty tracks reported that from
january 27 -- december 2011 there were more than 4 million foreclosures and while estimates of future foreclosures franked widely analytics recently estimated the foreclosures would strike another 3 million homes in the next three or four years. accordingly i do hope mr. secretary you can discuss with the committee how housing legacy issues and respective or form factors into this agenda. lastly i'm concerned that our financial system remains at risk and delays in implementation of dodd-frank and continued industry challenges both here in congressman the court to remove before they been implemented. while title vii of dodd-frank was designed to increase the transparency of the over-the-counter derivatives market many of the most critical components remain stalled in rulemaking challenge in the courts and obstructing the congress.
the slow pace of title vii rulemaking combined with delay in implementation of the volcker rule finalization of the living well and designation of systemically important financial institutions are made only more troubling when considered in the context of the marked financial scandal from libor and the money laundering cases to a legal foreclosures that have occurred since the passage of the wall street reform act. for these reasons i'm concerned that our financial system remains fragile despite substantial improvement since 2008. i therefore look forward to your testimony and insight that you may be able to provide on all of the above matters and what fsoc is currently doing to monitor systemic risk and preserve the financial stability. i yield back the balance of my time. >> the chair now recognizes the gentlelady from west virginia ms. happy kapp ito for five minutes. >> i would like to welcome our witnesses day. like most americans i was
shocked at the irs's admission on the tenth of a targeted groups for political reasons. this witchhunt is an insult kady and people in the freedoms are at the heart for nations democracy read no group regardlesregardles s of their political affiliation should ever be discriminated against because of their political beliefs. the first amendment protects the rights of individual americans and groups to express their views without fear or concern of intimidation. not only is mr. lew serving as the secretary of treasury as the iras transgrestransgres sions unfold he was also the white house chief of staff from january 12 until confirmation on january 13. we need to note more from the secretary that what steps are being taken to ensure this breach of trust never happens again. we need to know further examination is necessary to ensure that this behavior is not occurring in other divisions of the iras and we need to know why and how as chief of staff and secretary of the treasury mr. lew did not take immediate steps to bring americans actions
to life. after all reports indicate the senior iras officials have known about these for two years in senior white house officials admitted to learning about them a month ago. the american deserves the truth. that public service we take an oath to uphold the constitution. the american people and trust us to be stewart's -- stewards. it is clear that actions taken by the irs and senior officials violated that trust and are accountable to this duty. this is a sad chapter 4 nations democracy and it is an incumbent on this administration to take all appropriate measures to ensure this type of intimidation and discrimination does not happen again. i yield back. thank you. >> the chair now recognizes the gentleman from new york mr. meeks for two and a half minutes.
>> i know in your testimony before the senate banking committee yesterday you have the seismic ensure that dodd-frank implementation is done quickly to provide protection for consumers while ensuring to take a well rounded approach and lifting up a system as a whole. i look forward to your testimony and commend your councils find regarding basel iii implementimplement ation and the national coordination of protecting the nation's financial system from frequent and various cyberattacks. as the immanency banks and basel iii m. encouraged by the application of basel iii b. set community banks. as all business sole-source of financing community banks which were not responsible for bringing the economy to the brink during the financial crisis should not be held to the same standards as larger banks. i was pleased also to hear that during her testimony the basel iii with the a flaura not a ceiling for the international community. in my view the u.s. remains a competitive financial market for the necessary safeguards and actions of dodd-frank.
i'm anxious to hear how the council of financial regulation both domestically and internationally not only by reducing and importing systemic importing systemic risk into the night stays for the effective implementation of basel iii but also in the cooperation that is key to implementing the fdic orderly liquidation authority under title ii of dodd-frank. i just want to talk about the revelations last week that the treasury inspector general's report. particular groups by the irs have grown and the ig report findings show that some employees at the irs exercise poor judgment and used inappropriate methods to determine if groups qualify for tax status are troubling. while these methods are unacceptable and troubling because all individuals and organizations should be treated fairly by the iras the reports stated the conduct was not specifically motivated and i commend president obama india
secretary lew for taking swift action to restore public confidence to the irs and i hope while viruses taking these corrective measures it does not shy away from curtailing organizations to abuse their tax-exempt status. i have a specific example of mine when i raise this issue the father wants c-3 requires require states to be tax-exempt under 501(c)(3) of the internal revenue code. organizations may not attempt to influence legislation as a substantial part of the activity and it may not participate in any campaign activity or give any political candidate. here at the fund-raising letter from a 501(c)(3) organization. >> the time of the gentleman has expired. the chair now recognizes the gentleman from alabama chairman emeritus mr. baucus for one minute. >> thank you. congratulations on your appointment secretary lew and thank you for appearing before the committee today.
secretary lew you are obviously familiar with dodd-frank in your position as director of omb. now you are about to confront all of this, the good the bad and the ugly. one of the common elements in the democratic and republican reform proposals that preceded dodd-frank was the formation of some type of systemic risk counsel to help regulators share information and coordinate their actions. these counsels differed in their details and of course the end result was the financial services oversight counsel. our expectations throughout that rulemaking and was that it would be transparetranspare nt and have accountability especially considering the high level nature of the regulators
involved so it's deeply disturbing to me especially considering the events in the news over the past weeks that gao has found that there's a serious lack of transparency at fsoc. very little was put down and writing are made available publicly and i noted as secretary holder when you don't have a record you don't know the details and there is no accountability so my hope is as chairman of the fsoc you will work with us to ensure more accountability or transparetranspare ncy. >> the time of the gentleman has expired. the john -- the chair now recognizes the gentlelady from alabama ms. sewell for one minute. >> onto thank ranking member waters and chairman hensarling for scheduling this hearing today. i also would like to welcome and thank secretary lew for his testimony today. i am very encouraged to find a that since the council's last annual report the u.s. financial system has continued to
strengthen and make incremental progress. i'm also encouraged to see that many of the stopgap measures and regulations put into place by dodd-frank have succeeded in providing oversight transparency and continued liquidity in the marketplace. however this report is very sobering and that it identifies significant unresolved risks in the financial marketplace. these reports -- to this report points to lingering structural vulnerabilities in the wholesale funding markets continuing over dependency on guarantees in the housing market in and the emerging operational risks to our financial system imposed by increasing cyberattacks just to name a few. our work as members of congress obviously are far from family must continue to be vigilant in providing the necessary guidance to oversight to fully realize the overall object that of dodd-frank. at this time there may be common sense reforms we must consider in order for its purpose.
i want to -- as well as administrators of fsoc for their efforts in providing that. see the time of the gentlelady is expired in the chair now recognizes the gillman from mission can this to kill the for one minute. >> thank you chairman hensarling incorporated ranking member plotters and welcome secretary lew. five years after the greatest economic crisis and have -- since the great depression home values continue to recover. one way we can improve financial stability increase financial stability is by eliminating blight and abandonment in our communities. yesterday i hosted a meeting for members including from this committee mr. peters with assistant secretary god to discuss the ongoing amp portraits of demolition including places like flint and second on michigan which i
represent you this issue is not just important to my district but to the cities and towns across the country. targeted demolition strengthens municipalities and affects their long-term sustainability. leaving blight and abandonment in building the neighbor it's not only hurts homeowners nationwide but also makes our communities less safe if they can then run down properties incite crime. i look forward to the testimony today and working with treasury to continue to identify ways to eliminate blight and abandonment in our community. thank you thank you very much mr. chairman. >> the time of gentleman has expired. the challenge now recognizes the gentlelady from ohio for what he hopes will be one minute. >> thank you mr. chairman and ranking member waters and thank you secretary lew for your testimony today more importantly for your presence -- service to this country.
this years annual fsoc report discusses several areas of concern that continue to pose ongoing threats to the systemic financial market stability. though some are uncontrollable however there are some that i believe are desirable for the actions of this congress. specifically the report mentioned through the fiscal policy in the absence of bipartisan consensus is an ongoing risk. over the last two years we have unfortunately most of what has been showcased to spend bickering and the deficit, government spending and raising the debt ceiling. today hopefully with your guidance and testimony we can look at this report and work together to find if common cause and thank you very much for being here to help us do that. >> thank you very much for coming in under time. today we welcome the secretary of the department of treasury the honorable jack lew who was confirmed by the senate on
debris 27th of this year to service our nation's 76th secretary of the treasury. his prior government service includes 10 years at omb for both the obama and clinton administration as well as the state department. the deputy secretary in addition to secretary lew's service served as the operating officer for citigroup business and executive vice president and ceo of new york university. no stranger to the halls of congress are secretary has been an adviser to former speaker tip o'neill. secretary holds degrees from harvard college in the georgetown university law center. secretary lew yuba the wreck is to give an oral presentation of your testimony. without objection your written statement will be made a part of the record after oral remarks. i wish to inform all members that we have agreed to release the secretary at 12:45 today.
mr. secretary welcome. please proceed through. >> thank you mr. chair. thank you mr. chairman. i would like to say that i think all of us are in the same place in our thoughts and prayers are with those affected by the devastating tornadoes and the oklahoma city area and it's just a reminder of the terrible ravages and natural disasters can cause. our hearts and prayers go to families who are suffering there. chairman hensarling ranking member waters and members of the committee thank you for the opportunity to testify today regarding the financial stability oversight counsel in 2013 annual report. the four i addressed airport i want to say a few words about the treasury inspector general for tax administration's report last week. which shows some employees of the irs used outrageous methods to determine if certain groups qualify for tax-exempt status. as the inspector general's
report indicates while the conduct was not politically motivated it was unacceptable and inexcusable. administering the tax code would have any hint of bias is a solid obligation to be carried out with the highest of standards. that is why i moved quickly to take steps to restore confidence in the irs. within 24 hours after the report coming out i asked for and received the resignation of the acting commissioner and within 24 is later the president appointed a new acting commissioner. he is a burst of high integrity and earned the confidence of democrats and republicans for his professionalism. i've directed incoming acting commissioner daniel werfel to start today did carry out a 40 -- thorough review. first making sure that those who acted inappropriately for held accountable for their actions. second examining and correcting failures in the system that allowed this behavior to happen
and third taking a forward-looking view in determining what the irs has systemic problems that need to be addressed. acting commissioner will hit the ground running. he will take action as needed and will report to me on his progress within 30 days. we are going to make sure that nothing like this ever happens again. i would like to turn now to the council's annual report. this report represents the systemic collaboration among councilmembers and agencies and staff. it gives us a chance to provide congress and the public with the assessment of the difficult financial market and predatory development. the potential emerging threats to financial stability and recommendations to strengthen the financial system. i want to point out the strength of our financial system depends greatly on the strength of our economy. there's there is no doubt that we have made significant progress recovering from the worst economic crisis since the great depression. economies grown from fifth team
and a private sectors created jobs for the 38th straight month. the housing market -- our deficits are falling at the fastest rate in decades but there is more work to be done. we need to keep our foot on the accelerator. economic growth and job creation need to be more rapid. the president conference of jobs and growth plan and password strength as a recovery making these investments in manufacturing infrastructure and worker training. while taking a balanced approach to restoring our long-term fiscal health. the strategy will not only help grow our economy now and well into the future that will replace the sequester with sensible reduction measures princesses last lasting reporter financial system has grown stronger in a number of ways. capital and liquidity levels in the largest financial decisions that increase. regulators have taken additional steps towards improving transparency and risk mitigation in derivatives and other markets. the implementation of the dodd-frank and internal coordination of g20 reform priorities have brought
significant progress towards establishing more resilient and stable financial system both domestically and globally. the topic of dodd-frank implementation councilmember agencies continue to put reforms in place produce imported at the well additional work remains we are closer to the end of the process than we are sure the gameplay we have seen a good deal of accomplishes this recently including evaluation of an initial nonbank companies for potential designation. progress on a new framework for the good consolidation consolidated supervision of large financial institutions. progress on a new framework for the orderly authority and progress on implementing living wills and increasing transparency in the derivatives market and progress on enhancing protections for borrowers and other participants in the mortgage markets. despite these positive developments there are still risks to the u.s. financial stability. the councils report identifies those risks and make specific --
specific recommendations. market participants and regulars need to take steps to reduce full abilities and wholesale funding markets and government agencies regulators and businesses need to address operational risks imposed by technology failures natural disasters and cyberattacks. and reforms are needed to address the reliance on self-reported interest rate like libor. mr. chairman i want to thank the other members of the financial stability oversight counsel and all the staff involved with the 2013 annual report and their hard work and dedication. this is not going. this is an ongoing effort and we look forward to contingent to work with you this committee in congress to make sure we have a more resilient and stable financial system. and with that i conclude my opening remarks and look forward to answering your question. thank you. >> thank you mr. secretary and i would remind all members that at the direction of the speaker that later today during our vote series there will be a moment of silence for all the victims of
the oklahoma tornadoes and an opportunity to reflect upon that great tragedy. the chair will now recognize himself for five minutes for questions. mr. secretary i'm personally not going to spend a lot of time with you and discussing who what and when with respect to the era scandal but i would like to say this. and that is i don't know the level of responsibility that u.n. the president bear for this scandal but i know it's not zero and i think the american people would like to hear a little bit more from you and the president that the buck stops here as opposed to hear no evil, see no evil and i know nothing, and that may just a little bit of unsolicited advice so i'm not going to look retrospectively. i'm going to look prospectively. i know you have seen the forms that the irs has sense to
american citizens. the irs now reports to you mr. secretary and as for the last two and a half months. so i've looked through these forms and i find out where the irs is asking american citizens for all of their goodies both facebook and twitter including hard copies of all advertising or social media. under your watch will it be appropriate for irs agents to ask this? >> mr. chairman i take responsibility for the management of the treasury department and the management and oversight of the irs. there is a difference between general management oversight and the very important line that exist between policy roles in the administration of the tax system. for decades we have added an appropriate line. >> mr. secretary the administration just fired someone and it would seem to indicate there is some control over the policies that the irs
so to the extent you have the ability, and the administration has the ability to hire and fire the head of the irs would it be appropriate for the irs going forward to ask for this information from american citizens? >> mr. chairman if i could just finish the thought that i was on. there is a very important distinction between hiring a commissioner of the irs and there is one other political appointee at the irs and that is the general counsel. for appropriate reasons -- there is involvement on policy matters but on the administration of the tax -- >> so are you unable to -- policy? >> on policy i can express views on tax policy. >> mr. secretary i get to control the time ear bud in your opinion is inappropriate to ask american citizens about their
prayer life, how often they attend prayer meetings and what are sedative time organizations are spent in prayer groups? >> mr. chairman i'm not familiar with the specific document you are looking at. as a general manner there's a highest regard by the irs to classify individuals protecting them from the questions that invade their privacy. >> is there and your personal opinion is it appropriate for iris to be asking about the prayer lives of american citizens? >> mr. chairman is a hypothetical question. >> is not hypothetical mr. secretary. the people who received this application under penalty of perjury if they didn't disclose their prayer lives to the irs. >> mr. chairman i cannot respond to a form that i haven't had a chance to see and i will have to get back to you.
>> after being on the job for two and half months and it's one of the biggest scandals that has rocked washington in years i would hope in the matter of priorities that the secretary of the treasury would undertake to review this material going forward. >> mr. chairman i have made clear that it is an extraordinarily high priority of mine to restore confidence in the irs and that is why we have a new commissioner taking over today. his first job is to find out who is accountable and make sure people are held accountable for any actions or wrongful. >> mr. secretary regrettably my time is running out and i am assuming you will have app won't -- ample opportunity to talk about virus but i'm actually going to change subjects. it in the fsoc report on page 13 it states quote the council recommends the treasury hud and fhfa continues to work with congress and other stakeholders
to develop housing reform systems. mr. secretary i've been a chairman or vice-chairman of this committee for the last two and a half years and i am unaware of any activities of either hud or treasury to work with congress. i am aware of the white paper that was completed for over two years so i'm not sure who treasury and hud have been working with but it hasn't been this committee and i see my time has expired. i would like to have the opportunity to speak to you about this later to find out if the administration intent on doing anything with their white paper besides allowing it together dust on housing reform. the chair now recognizes the ranking member for five minutes. >> thank you very much and mr. secretary i wanted to talk to you about living wills but i think it is important before i deal with public policy that's we are all concerned about that
we make clear some things on the earth. as i understand it, the knowledge about the irs problems was only learned recently by you. is that correct? >> that is correct. >> and as i understand it, the president was not told about the problem by his staff for anyone else. is that correct? >> that is correct. until the report was completed. >> okay and i understand there's an investigation going on. >> there are multiple reviews here on the hill and by the department of justice and within the irs. >> and so the administration has not in anyway any way said they are not willing to try and find out what was happening in the correct way. is that correct? >> yeah quite to the contrary. we are determined to make sure
the activities that were disclosed by the inspector general are unacceptable. we have sits on a strong this terms. we have appointed an acting commissioner who is going to make sure people are held accountable and has got to make sure that how there was of breakdown in communication and management to permitted and look around at the irs to make sure nothing like this can never happen again so we are determined in restoring restoring confidence of buyers is operating without any bias which is our obligation and we are committed to doing that. >> again and my colleague the chairman of this committee said that he knows that you and the president must have known something. he said basically that you must have had some information. would you please take as much time as you want that i have left because you were interrupted and you did not have time to respond to that and if you feel the need to say something else about it please use my time to do that here it's
the congresswoman, i was informed of the fact that there was an audit underway on march 15 when i had the initial meeting with the inspector general. it was brought to my attention that a very high level that it was an investigation regarding 501(c)(4) approvals and i was told there could be troubling findings and then i did the appropriate thing. i did not do anything to get in the way of an independent ig review. that is what agency head should do. they should give the ig the opportunity to complete their work and access the records that they need. as has been discussed over the last few days, there was some discussion as is appropriate between attorneys and other staff and agencies in the white house for situational awareness. now i want to make clear the reason that it was not brought to my attention before the report he came public with with the facts were and the reason it was not brought to the president's attention before the inspector general completed his
report is that there was nothing that we should have done to interfere with an inspector general report. just like the ir should not impose any put influence on administration tax system agency heads and senior political officials should not exercise any action to interfere with an inspector general review so the first wing ring of the facts was when they became public tuesday and on friday before last in a general way and then just last tuesday when the actual ig report was delivered. within 24 hours of getting the ig report we took action. we asked for and got the resignation of the acting commissioner and 24 hours after that the president appointed a new acting commissioner listers today who is going to undertake the path i described with a three very important parts, accountability finding out what happened and make sure it never happens again. >> thank you so very much mr. secretary and now for public policy. what can we do to help get these living wills and so that we can make sure that we have a process
that works in the orderly wind down? >> congresswoman we have made great progress in the area of living wills. we now have living wills on file for the very largest institutions. i think the challenge is now to make sure that we know that those will work and i think the operational issues are not insignificant. we are not hopefully going to have a test of these anytime soon. we are going to need to do the kinds of exercises to make sure the cop capital is available in the structures that are available so that if there is a crisis they work. where committed to doing that in the rate at her agency is responsible for the living wills as well. >> i thank you very much mr. secretary and i look forward to working with you. i yield back the balance of my time. >> the chair now recognizes the gentlelady from west virginia ms. cappacio. >> thank you mr. secretary and
you hurt my opening statement so i'm going to ask a question regarding the irs scandal. i think what would be in the best interest of the taxpaying citizens of this country is to she said this could never happen again. how are we going to be able or the administration be able to convince the american public that is being targeted for political lee for religious belief or lifestyles or whatever you know in order for this to a lay the american mind at ease which i think is very difficult you have got to come forthwith everything. and so how are you going to issue a report, fire more people? what kind of endgame is going to be here? >> congresswoman there is nothing more important than restoring the confidence in the american people of the irs. it is the central capacity of
the irs to function effectively and the capacity of our system of government to function. effectively. by bringing in new leadership we have a person in place who will very quickly get on with first making sure we hold people accountable. that is very important. we have to get the facts and make sure any actions taken are based on fact. secondly the kind of scrutiny that we need to do now has to get at how did this happen? how could the communications be so bad? how could the management be so -- but i can't sit here today and tell you we completed that. i think the third piece is really ultimately the answer. we have to look beyond the facts here and asked more broadly is there something systemic about the management structure of the internal revenue service that needs to be fixed to be able to
say with confidence that not just with regard to this area but more broadly we have taken the kind of looked to be able to say that we can be confident that this won't happen again. now they're all kinds of information people have to provide on a confidential basis to the irs. we have to protect people's confidentiality and while most of us would rather not have to file a lot of forms when you want to get approved and a not-for-profit -- >> how will we trust that information a matter what it is? i think the erosion of trust here is tremendous and i think the best thing, advice i would give to you is bad news doesn't get better with time. you have got to get it out there and you have got to get it out in the strongest and the most honest to the american people. i'm going to move to the substance of your parents today. i've two questions. one is secretary geithner your predecessor in talking about a
culmination of dodd-frank he and i had several conversations and he talked about how we have all this new regulation and we are going to scrape out the outdated regulation and outmoded. he really couldn't come up with any outdated or outmoded regulations that he actually was draining from the upper piling up regulation in the financial financial sector. this is an area that you're interested in and as the fsoc dealing with this? we hear daily that if it's not run regulation or two it's the continuous waste of regulation is dragging down particularly community banks and regional banks. >> conquer banks. >> conker soman i will tell you in general that's an area of great concern to me. i don't have the time yet. i'm very much committed to make in a full implementation of dodd-frank happen in this quick and -- i will say when i was omb director we did for the first time look back in the overall regulatory system to ask agencies what you have on the
books that could be eliminated and we eliminated a whole bunch of regulations across the government. i think it's an exercise that we should not just move forwards but we have to move backwards and forwards both and i hope we can get dodd-frank in place and have the ability to do that. getting dodd-frank implemented is a fair amount of work and getting it done quickly is -- >> i hope the next time you come before the committee viewed well because i'm going to ask you and other regulations. >> this is something i'm personally committed to as a general principle. >> thank you. lastly and only have 25 seconds. basel iii, chair the financial institutions subcommittee. the ranking member talked about this quite a bit, the inability of community and small banks that deal with the risk-weighted aspects of also three. have you considered any kind of pushing that back in those institutions and why are they involved anyway? i just ran out of time.
>> if i could take a half minutes answer the question. i think it's very important that all the regulatory agencies take into consideration whether not they are our special issues small and medium-sized institutions. the law in many regards his reflected that and in the review of regulations the agencies are looking at that as well. i think that the discussion that i've heard in the last few weeks suggesting that maybe basel iii should be repealed or not be used, i worry about that in its principle because basel iii is a floor for the world. if we don't keep basel iii as the driver for race to the top we face financial -- >> the time of the gentlelady has expired and the chair recognizes the gentlelady from -- for five minutes. >> thank you mr. chairman. welcome mr. secretary. i would like to discuss with you
another issue that is on the mind of americans and that is the state of the economy. we continue to see improvement in the housing set your width increase construction activity more sales and higher prices. as you know the economic recovery relies heavily on a healthy policy market. complete -- of the secondary mortgage market creates difficult conditions were too much credit is available in good times and too little when there are problems. thus exacerbating a downturn. >> congress ,-com,-com ma and i think that are challenges we go through winding down fannie mae and freddie mac is really multiple parts. first we have to make sure taxpayers recover the big investments they made during the financial crisis and are working
very hard to do that. they have long-lived assets and it's going to take a while to wind down those institutions. we also have to be thinking ahead how do we have the housing a housing market that strikes the right balance and provides the opportunity for homeownership and economic tizzy that goes with that and so much of the construction and employment and other employment in our country is related to housing construction with a prudential considerations that institutions and individuals can be overextended creating some future crisis. we are working on that. i think it's very important that we have a reduction in the presence of federal direct and guaranteed loans that we have an active private capital market for mortgages and that is our goal as we move forward. >> thank you. mr. secretary, some stakeholders last year library manipulation
breached the largest bank to the detriment of community and regional banks. as you know community banks are as significant small business lending. we continue to hear the obstacles that small banks are facing. what have regulators done since the libor scandal and the manipulation of grades that would -- to small businesses? >> congresswoman i think they are kind of separate issues. the manipulation of libor was a terrible abuse of trust. in addition to the world financial community and participants in an accepted libor is something that was a market determined reference rate and then the manipulation of that was very very unsettling in addition to being very wrong and bad behavior. going forward one of the things
the fsoc reports make clear is we need to work on an international basis with other financial regulators and market participants to develop an alternative to libor says there needs to be a broadly accepted market reference rate to take the place of libor if there's a need to replace it. that is one area where there is substantial progress being made. i think in terms of the mechanisms for capital to be made available to small business that's a very complicated practice and i think the trade-off that i was describing in the area of housing lending that same trade-off exists in commercial lending. there is a need for small and medium-sized enterprises to have access to credit. that means taking some level of risk. we need to make sure that institutions don't take risks. striking that balance correctly so we can open up channels of funding for small and medium-size enterprises is very
important. >> but we have to also provide a level playing field for those regional and community banks that are really the ones that are -- and not put them at a disadvantage. >> as i was indicating the fourth i met was small and medium-sized bank representatives. i have shared the concerns they have raced with me with the regulators. i have a very clear understanding that the regulators are sensitive to those concerns and as they work through the implementation things like that basel iii ruled they are working to try and address the legitimate issues that have been raised. >> thank you mr. chairman. >> the gentlelady gives back the balance of her time the chair recognizes gentleman from new jersey for five minutes. >> i think the chairman and i want to get to the issues on financial service but let me touch initially on the services of the irs. i must say first of all i found
your comments disingenuous at best because your initial statement was as soon as you found out of the situation you're outraged and he found it outrageous conduct and you took immediate action and made it top party and the severe first focus and the first question from the chairman asking you about documents from your own agency that are better from your agency veteran of public domain and in the press for literally weeks now and again from your agency your response was you know nothing about them. you do not know the details and you have to get back to us. this is really a your first priority going forward trying to solve the situation not retrospectively in the future i would think sir you would know about the basic documents that everyone else in this room knows about but that is a rhetorical question and we can judge for yourselves ourselves whether you're trying to fix this for the future of the party. my time is limited. in another hearing room there is
another woman from the irs lois lerner who spoke from the irs has stated that i think she has taken the fifth amendment so in her statement she stated she had done nothing wrong and can then -- at the nothing criminally wrong or did not violate any irs rules or regulations. would you agree with her assessment that she is done nothing wrong and did not violate any rules or regulations or criminal conduct in any way shape or form? >> congressman i think it's important we get to the bottom of the facts. >> do you think she has done anything? >> congressman is not a yes yes or no and if you would permit me to answer your question. you have asked me a question which we have new acting commissioner taking office today. i am meeting with him this afternoon. i'm not waiting three days to meet with him. i didn't wait for five minutes after i read the ig report. i got on top of it right away. i got the wheels in motion to get new irs commissioner in
there as soon as possible. >> you fired someone immediately here in the the case and whether you knew he did anything criminally wrong or violated any regulation whatsoever. >> congressman if you're talking about an agency or an ig report makes clear that the favor was totally unacceptable to restore confidence to begin at the top. we needed a new head of the irs which we have as of today. we are going to get to the bottom of this. anyone who is accountable will be held accountable. >> so you don't know whether she did anything wrong? >> congressman i'm going to wait to have all the facts. we don't have all the facts. >> you were able to make the decision in firing someone without knowing? >> i knew he was the acting commissioner of agency. i think as the head of an agency there was a standard that is unique. frankly, even if no wrongdoing --
>> do you know what position she held? >> yes, i do. >> and it is, or was? >> she is the deputy commissioner in this area. >> in this area so when she be responsible for this area if she if she was the head of the syriac? >> congressman i'm not going to go through person by person asking questions that i can answer right now and none of us can answer right now but i'm committed as we have a clear message that everyone who is accountable will be held accountable. >> let's look at some of the people that you abe are responsible for. the ig alerted the treasury in may or june. have you confirmed that the deputy secretary and general counsel word -- by the inspector general back in 2012? >> congressman i think we have made clear that the deputy secretary was aware of the fact that an audit was underway.
he did not become familiar with the details of it. >> do you know whether or not the deputy secretary, do you know who if anyone did the investigation back at that time? >> we have over the last few days made clear that there were as appropriate conversations among staff where the fact of an investigation was clear and subsequently in the last few weeks as draft reports were being either, the reports themselves were available and the conversations but there was no action taken by anyone in the treasury department in any way to interfere with the inspector general's report. that was the number one goal. >> i understand. did you contact the irs commissioner about the false testimony that the commissioner had get to congress a month before? >> commissioner i told --
[inaudible] >> that time of the gentleman has expired and the chair recognizes the gentleman from north carolina mr. watt for five minutes. >> thank you mr. chairman and mr. lew for being here. let me turn our attention to fsoc since i thought that is what this hearing was about further the internal revenue service. i assume the internal revenue service -- does not own fsoc. >> no it does not. >> one of the things that you all have been doing according to your testimony is designating some financial institutions as particularly significant to the economy which resulted in them being given enhanced scrutiny and some higher standards, so
you designated some financial institutions and at the bottom of page six in your prepared testimony he say you designated eight financial market utilities. what kinds of utilities are those? >> the utilities of a clearinghouse. >> okay and then you also say that you are looking at a number of nonbank financial companies that will be designated. what kinds of institutions are those? >> congressman the identity of the company has not been publicly noted cousin ordered to go through this process it requires getting confidential information from the companies and it would be inappropriate to
list the specific entities. the test that is used, the standard is whether the failure of this company would be a threat to the u.s. financial stability. so the question is if something were to happen happen in a non-bank entity that could be, kind of systemic problem, and that is the way the review is structured. it's really the interconnection between the company and the broader state of the financial stability. >> which actually gives me to the point that i was trying to get to since a number of people have raised concerns that by designating these entities we somehow give the impression that they are so important and the government won't allow them to fail. walk us through if you would how
if the vote of fsoc is to designate a non-bank that there will be regulatory oversight by the appropriate regulatory bodies. in many cases the federal reserve word of her bag and click institutions. >> what each one of the significant institutions end up having to do one of those living wills scenarios if fsoc designated them? >> besides level would require it. would be a case-by-case determination that i had to get back to you on that. >> all right. on page two of your testimony, you indicate reforms are needed in the libor system to address the reliance on voluntary regulated in self-reported
interest rate. can you tell us what kinds of reforms might be in the contemplation on that front? >> briefly keep it, mr. secretary. >> thank you, mr. chairman. please reference rates are interwoven into millions of financial trip actions on a contractual basis. we need to have reference strains that are reliable and not subject to manipulation and if libor is not in that status at some point to have an alternative to go to. recognize international regulatory agents he's been working with market development alternative is critical because the finance you don't ultimately need to move to a difference reference rate, there needs to be referenced at available.
>> a ton of the gentleman has expired. without objection or chairman emeritus is recognized for one minute to speak out of order. >> the staff of the house of representatives uses one of his most valued staff members. i think we all know and love war and try a new served as deputy staff to her. very intelligent, diligent, informed individual in tribute to him and all the valuable work of our staff on committees and personal staff, i would like more and to stand up and take a bow. [applause] i appreciate that, mr. chairman. >> now the chair recognizes the chairman emeritus for his five
minutes. >> thank you. secretary lew, there have been the gao and any press reports and articles have emphasized the secrecy of the fsoc. last week was an article in the washington paper where one gentleman heading up a nonprofit organization with liberal leanings actually said the fsoc proceedings make the bureau look open by comparison. they treat their information as if it were a state secret. the council doesn't transcribe his meetings. is that correct? >> minutes are kept. >> minutes. would you commit to transcribing the meetings the gao has recommended in releasing transcripts of the appropriate
reductions after a certain period of time quite >> mr. chairman, fsoc deals with matters that range from company specific proprietary information to bribe policy. >> i understand appropriate reductions. as hagrid asked the confidential. >> for way or the fsoc has lived in policy areas coming straight to be open in terms of public notice and taking comments. for example, in the area of money market role recommendations to the sec, they been open for comment. >> would you commit easter following the same thing the fed does about releasing those transcripts? >> i would have to go back and look at that. >> that's all i'm asking.
the fsoc doesn't keep transcripts and i don't even think they keep minutes of their staff meetings or subcommittee meeting or committee meetings for most of the work is done. would you commit to transcribing this minute clinics transcribing this proceedings in keeping minutes of those meetings? >> on ottawa practices during meetings are normally transcribe. the challenge of work in a complicated areas involves many, many meetings. i'm happy to follow up on concerns you have. >> is an outcome of this is one of the most important committees for councils in response to the financial crisis. i think it's important from an historic basis. >> congressional staff need to address important legislation. these are complicated questions.
>> take a look at what the gao recommended. and see if you can't get us some assurances. thank you. let me ask you this. you've been questioned about this irs name. you now know there was to be on the lookout for some included tea party, patriot groups and glenn beck's group that is maintained since only 2010. in 2012 there is quite a bit of press reports about this and it's my understanding that it may come as several people in the treasury were briefed, but as chief of staff at the white house, you were briefed in june and a letter to by mr. george.
>> my first conversation is march 15, 2013 after he became treasury secretary. >> are you aware last friday he testified he briefed you clanks >> he testified he briefed me in march 2013. >> actually he says talking about may and june 2012 i alerted commissioners she met on a 30 and subsequently noted the general counsel june 4 and subsequently other to the deputy secretary neil wolin about this matter and upon assumption and into the position i mention with secretary lou. >> those march 2013. it is important to note the fact of the ongoing audit was not a secret. >> it was the subject of
numerous newspaper articles. >> just a fact of the audit being undertaken. >> specific information that democratic legislators leaned on the administration to conduct investigation. >> the time of the gentleman has expired. the chair recognizes the gentleman from new york, mr. minx. >> thank you, mr. chairman. i want to finish right-handed on my opening state that because we've got to make sure we tighten up. i want to make sure we don't lose the fact that some people has used the status. i stated a specific example in mind and talk about not only the 501(c)(3) requirements to be tax in the organization may not attempt to influence legislation as a substantial activity and may not participate in campaign activity or any political candidate.
501(c)(3) is more confined. read a few lines. i'm going to ask for your help. let me explain why this is so. barack obama as president. the democrats control congress. your gift would allow us to show the inference below he has no close and soon barack obama would have to take a stand. your gift will help us expose hypocrisy about, and allies in congress. is this letter okay from a 501(c)(3) organization to send a fund-raising letter like this? my point is i hope in the face of the variability to prevent any future overreach interrogating by the irs that we don't say of the important role of the irs in answering questions like these that are also at the heart of the public trust. with that, mr. secretary, to the issue at hand. i want to make sure they let
people know the irs has oversight and it's important for people to make sure once you get the 501(c)(3) designation that they still should oversee two overstepped their bounds. going to fsoc in the issue at hand, as they sit it in my opening, i'm encouraged to hear what their reasoning to implement dodd-frank quickly come he also mentioned the need to look at the system as a whole but crafted rules for taylor to institutions rather than the ones they fix all the same. what are your views and thoughts on bifurcating in order to make community banks more secure by establishing a set will cap ratio applicable to community banks in order to allow them to operate more effectively for our economy.
>> congressmen, i think the basel three rules now work done by the federal reserve ordered board will unlikelihood based on public statements made by members of the fed reflect the differences in risk in some ways. so they are capital surcharges for very large institutions already. i don't know what they're going to set the rates and how they're going to address it. but there are important differences between small mac institutions. the thing we have to keep in mind is small and medium-size banks are not without some element of systemic risk and world focused on the financial crisis of 2008. in the 1980s the financial crisis was a savings and loan crisis. we have to look at risk are just as a question of size, the
characteristics of activities and exposure. we are very much aware of the fact that community banks play an important role in all of our state and all of their communities. i think the laws reflect that and the regulators are attentive as they are breaking their rules. since i have it completed its difficult to address exactly how it will be taken into consideration, but i know there is an effort to take into consideration. >> and also yesterday's testimony before the senate banking committee, you mentioned basel three would be a floor as opposed to a ceiling. how will the implementation of basel iii, thereby reducing institutions around the world. >> would make a lot more progress than other countries in terms of recapitalized in our financial institutions in terms
of paid liquidation authority and resolution authority in place. there's a lot of work to be done and our financial stability is connected to the well-being of institutions regulated in other parts of the world. it has a lot to do with the ability to address cross-border issues also. we will not lower our standards to some other standards. we have to have the world standard at a higher level and were working with the g20 and other bodies to bring standards that. basel iii is a piece of that. >> the time of the geminis expired. the chair recognizes mr. newco power. >> thank you, mr. chairman. secretary lou, thank you. you and your previous life, i'm sure you are where the president was not fond of the citizens united case. the supreme court reversed a century of the type label open
the floodgates for special interests. you may have also been aware some to senate democratic leaders wrote in 2010 then including committee chairman bachus and senator schumer called for the irs to investigate conservative 5014 organizations. at the time, did you or the president think that was a good idea for what the senator said just said that the irs look into those organizations. >> congressmen, i was not familiar with the statement at the time. >> of his letter they sent the irs. >> i couldn't hear you. >> as chief of staff i would not get an irs letter. >> is fairly publicized. i don't think it was a big
secret. would you think you were the president of tickets a good idea for members of the senator has to be asking irs to investigate or to audit organizations? >> my position has been always will be the irs has to be beyond political reproach. there can be no question of political bias, no question of political motivation. organizational it has to be set up and how it's operated. asked by someone except the boat these practices have been. there's no disagreement on criticizing practices that are the subject of these questions. we are committed to fixing identified legitimate questions as to who qualifies for 501(c)(3) status, but has to be a politically neutral way. i have said to democrats, republicans, before the set of facts became --
>> you've said that before and i agree and i would say how america will be watching how you handled this because it to find a lot of your service in that capacity. i want to move to another question. a secretary treasury are governed by laws including the sifi provisions set forth in dodd-frank. you're also one of the three abu regulatory board about to finalize designation. given the policy determined by this board versus what we are going to do with the sifis, which many of us americans earn that some of large u.s. insurance come as could be disadvantaged by this designation because this is a lot less transparent process that what's going on in the u.s. can you comment on what you can
assure us that we are not going to disadvantage domestic companies with a process that is going on that's not as transparent? >> congressmen, as we go through the review of whether or not make determinations, we are working an understand of every opportunity to comment. it will be a process for their full visibility into what we are doing. we worked at the international level to try and have as much as we can approach us. obviously it's more in all areas to restrict the right right balance of protect in the u.s. economy and sometimes that taken actions that higher-level credentials concerns are taking. return to convince them to raise standards. were trying to level the playing
field because it is in their interest and our interest to be comparably taken steps to make sure we don't have financial crises. the questions we ask relic at their interconnectedness to the broader question of financial stability. we are not stepping into the role of being the state insurance commissioner. we are looking up whether there are levels of risk toward the designation. >> having different capital requirements for the people inside the box versus people outside the box will cost them competitive disadvantage. would you agree to that? >> would need to make sure based on whether there's a material risk. >> the time of the gentleman has expired. the chair recognizes mr. massachusetts, mr. capuano.
>> thank you for being here. mr. secretary, i want to associate myself with mr. neugebauer. the only difference between overall they are citing are said to give you the benefit they should do the right thing. do you know that and i figure what is the right thing as we move forward. it also strikes me is not surprising that had you not fires someone, today would be criticized for not having fired someone. it's an interesting box, a cute trick to play, but it is worth pointing out. either way you'll at least be beat up a little bit and i'm not going to participate or not. i'll try something else. mr. secretary, i want to talk about what transfer does. almost all the money came in during the bailout in difficult times has been paid back. almost all the money. the most glaring example of who
is not a standard friday. my number show $187 billion mm and that has been technically pay back all those 65 billion has been paid in another 66 is about to be paid, which represents 70% of the overall. that money is not allowed to go towards payment of principal. it's my understanding treasury or fsoc could simply change the way it accounted and allow them to pay off their debt like everyone else was allowed. every bank, every private company with a loud to pay off debt with interest and dividends and the government made a very good profit and i'm not suggesting we shouldn't make one on fannie and freddie. as you move forward take a look within your shop now to make sure we allow fannie and freddie to be credited.
if that happens, it is the right thing to do and accepts reality. the reality is to pay back $130 billion of the money we have plowmen and they should get credit for at least some of that. it's my understanding that could be done internally. they could take a look and get back when you can. if he won't tell me why and if you can't, tell me what action we need to take. the fha right now is probably about to take what is called a draw on treasury. even though they have 30 some odd billion dollars in the bank and no thoughtful person thinks lack of access taxpayer money, the love requires them to do it because their blow his third percentage of numbers. i think that is ridiculous. fha should draw when they need the money but should not be required when they do not and
i'd like you to take your response or comment on whether that is a good move for him if you'd like to see amended. go ahead. a couple more after this. >> i'm giving it back to you on both issues. i would say very briefly that the treatment was set up so all of the profit go to the taxpayer until they're out of conservatorship and discharged applications. i think that it's a very high priority and i'm happy to follow up with you on the other questions. >> as is commonly done they will not get out because they will still owe at any given time. >> on the fha draw down, i'm happy to follow up with you. the economic significance of the difference is probably not as great as the description sounds
if they don't need to draw on it. we are following prudent practices of the rules to make sure fha is able to continue functioning. >> i totally agree. it distracts us with a real discussion of fha. the last i'll talk about his derivatives. my understanding is the library issue might have $500 trillion market. i know this international review going on. i've also read recently another potential is canada's interest rates but also slots category another $400 trillion at the market that may be the exact same thing but the exact same place. we're talking close to one quattro and dollars worth of a market, which is insanely ridiculous. it's 15 zeros. i've never used the word quadrillion in public before.
i hope to never do it again. i'm not a scientist, so i don't get to use molecules. i'd like to know at some point what fsoc is going to do with the scandals brewing. >> the time of the gentleman has expired. the chair now recognizes mr. campbell. >> thank you, mr. chairman. i will take quadrillion trista was a bipartisan term. secretary lew, getting back to the irs issue, the audit determines whether or not there is targeting and determined there was targeting. do you believe it is important to know why the targeting occurred? >> congressmen, it is important to hold accountable anyone who was accountable. the process is underway. we have a new acting commissioner taking over today who that will be his first order of business to make sure we know who made the decisions.
>> should we know why? is not a logical question? >> its import the ig report noted no evidence of political pressure brought to bear. i can tell you there is no -- >> the ig -- their purpose was to determine whether it existed, not why. does that lead you to conclude there was no political involvement at all? >> appropriately we did nothing to interfere with the ig report. the ig report came out a week ago. there are ongoing efforts of the commission are coming in to take review of the personnel involved. >> if i could just finish. with multiple hearings underway. the department of justice undertaken a review. so there's an awful lot going
on. >> the review is whether there is criminal activity. >> have you asked them to determine why? >> i think we have said it is unacceptable behavior and those who participate will be held accountable. the fact that there's no evidence of any political involvement is very. it doesn't make the action any less reprehensible. >> just because there's no evidence now doesn't mean there is some evidence we found. are you trying to find that evidence if it's out there? if somebody robs a bank, it is reasonable to conclude they did it for the money. reasonable to conclude they did for the money. when someone targets organizations entirely of one political event, it is reasonable to conclude that was the reason for doing it.
you can't assume that. >> with concerns like this arise -- >> shouldn't you overseen the irs are trying to find that out? >> when concerns come up, the place to go is the inspector general to do an investigation. that is what has happened and what is ongoing. >> now sits in the the department of treasury. does she want to know why these people did this? >> congressmen, i've said many times and will repeat, i have committed, the president has committed to making sure we figured out what happened here, holding people accountable. i also believe it be inappropriate to stand between an ig investigation or interfere with other investigation or criminal investigations. >> have you spoken to anybody since he found out in terms of whether these people doing this? over the time to to accomplish
here? >> congressmen, -- >> have you had many conversations like that? >> says the report cannot i'd many conversations of what we need to take. step number one was the resignation of the commissioner. i'm going to meet after this hearing with the new commissioner. i haven't had a chance to do so, but i will meet -- >> anything you can share about the motivation? >> congressmen, we all have the same facts in front of us at this point and we will cooperate with the investigation. but i won't do is put in a political intervention in the review of an ig and i won't put it political intervention that taxes them because care what the worse than the disease. >> when you do find out whether there is political intervention
then. >> -- evidence of political pressure. if there becomes evident, that would be significant. i can't respond to evidence that is not yet uncovered and there will be much time. >> what i'm covered. thank you, secretary. i don't like. >> at night to thank the chairman and the ranking member and welcome secretary lew from the great state of new york and the residents of that great state are very proud of their public service. were proud of you. congratulations on your appointment. in dodd-frank were a number of regulations that we called upon the agency to come forward with. could you bring us up to date on how quickly will get these regulations into effect, specifically in three areas. the nonbank designation, the
poker rule and the capital rule and requirements. i do not favor legislating requirements. it is dependent on many changing type areas. but could you comment on the basel capital requirement of roughly 3.5% and also send a bill put in the senate that mr. veteran others would require your 15% capital requirement. again, congratulations on your service. >> thank you very much, congresswoman. from my first day as treasury secretary, i've been putting an enormous amount of time into stepping on the accelerator and the implementation of dodd-frank. i went to restrain it to the financial stability oversight council and shared my first meeting within our being sworn
in. i met with retransfer meeting said many regulators independently. i believe the role of the treasury secretary as chairman of fsoc is to keep the pressure on for action and i've made the case to them and publicly that we have to measure our progress in weeks and months, not years. we have to get to the end of implement team regulations. important to remember one of the reasons for delay was that there was a political fight over repealing dodd-frank. we had industry fighting with everything it had to slow down the implementation and i think we are beyond that. there's now a consensus in the industry and certainly the view of myself and other regulators at getting dodd-frank implemented as a top priority. palate is stability in terms of know about the rules of the road are unlike everything else we've do more fine tuned as we go along. one of the problems between the
great depression of 2008 as we took our than half a century will require constant attention to the financial industry a plus too rapidly to take 50 or 70 years of to see whether the tools are effective. in the nonbank rolls we hope to make a determination same at the fsoc level. i think trying very hard to come up with a common approach, which should be the best way to have clarity in the marketplace in the capital requirements, the fed is working towards finalizing regulation and statements made by numbers in the last few weeks. i think they are working towards trying to create a system that gets as close as possible to meeting the concerns of small financial institutions bought been able to say we send it too big to fail in iraq urging them
to get to a conclusion as quickly as possible. >> specifically the institutions i have the privilege of representing have already implemented the proprietary rule. they have moved out of their major headquarters in the proprietary trading into a different organization or stopped it completely. could you speak more on the market making rules that they are working on how do we maintain the liquidity and markets, but at the same time have financial stability and safety and soundness. many people are concerned about getting the road right in order to keep our competitive edge. >> it is very important because what looks like the same act that he may be a very different activity. if you need to have an inventory to play the role as the market maker, that is very different from taking a bat and buying
proprietary capitalist state for yourself. the rules will have to distinguish between the different reasons financial institutions hold assets. they are working very hard on this. the definitions matter. the coordination amongst the agencies matter i'll be reconvened the strips to make sure all five nations is her talking to each other. >> thank you. gse reform. produced soon i'm not? my time is expired. congratulations. >> a survey to yield 10 minutes to speak on the matter. but he won't. the chair recognizes the gentleman from new mexico, mr. pearce for five minutes. >> tram on thank you, mr. secretary for being here. when i was in college at a professor of statistics was making the point i'm sure
everyone has heard of that pupate chimpanzees in a room with an infinite number of typewriters and they would eventually read the works of shakespeare. you're asking us to believe you have an infinite number of irs agents conducting an internet number of audit and they all just happen to be conservatives. that is more preposterous, sir, in my statistics professor. the fact i got an e-mail before the story broke from a gentleman in new mexico would you let out and didn't know why he was singled out and there is nothing in the audit that said what it was about. but he noticed a name on the outside of the folder at the end of the interview after no significant questions on his practices in business to ask if
he knew that name. he didn't know the name. on the way home he sighed, i think that is that guy who went to the meeting three years ago. went to one meeting he didn't much care for her. it was the same guy who organized the albuquerque tea party, went to one meeting, but a small check, maybe 25 bucks and for that three years later, he is picked out a new one is to believe there's no political overtones. you don't find any political nuances to this situation there and i find that to be an incredible situation. we are also told as we been told in many other scandals and the administration that the administration had no knowledge. just to run a few test in various, the administration had no knowledge. we had an american border region
code with rivals ventimiglia to new mexico. a crime is committed. no one yet has been held accountable. john corzine took $1.5 billion from segregated accounts. 2011 and i hear you saying things like atta wanted to get in the way of the investigation. the facts have come out. at what point are you going to be suspicious the facts all come out? 2011 mr. corzine has yet to be charged and it's a crime to take out money from segregated accounts. if you take a look at the gsa conference, the doj typing up a few phones. maybe we don't talk about doj typing on a search on phones.
and his parents was a co-conspirator says guilty and i wonder what his parents were accused of. so we are sitting here today, understanding the administration had no knowledge of the circus dances, not even a benghazi and where to sit here and take one of these artful answers that she give. myself, i don't know. but i'm going to ask about the war on the poor that this administration has engaged in driving interest rates to zero, you're decimating the people who have no financial sophistication. these are people eight times more likely to have money in
bank accounts. the aging, the elderly. they're the people come out of my town halls and say i live my life correctly. i bought my home. i have a savings account. i was expecting i could live on my savings and now i have to dip into it because i get no interest every month. this administration continues to have this one poor, the elderly at the benefit of wall street what he thought you're doing so much for the 9900 been the case is exactly opposite. so i don't really house in a great question they are going to answer any questions that come up today. i don't have any great impression you will stop your war. just know it's realized it's going on. new mexico is 31,000 per capita income. we recognize the war and the poor when we see it and i don't
back. >> the time of the gentleman has expired. the chair now recognizes the gentleman from georgia, mr. scott. >> thank you, mr. chairman. welcome, secretary lew. you have expressed your concern over the issue. the administration's concerns and they look forward to moving to a speedy conclusion of this irs situation for there is no more penetrating agency that penetrates into the personal lives of the american people at the irs. the concern of this investigation goes for democrats and republicans as well. this is an american issue and the american people are expecting us to get to the bottom of it and not politicize, not score these political
points. one of the things i do want to mention is yesterday in the senate finance committee, former commissioner shuman mentioned that he knew about this investigation that there are foxhound muharram, that he did not take that information to higher-ups. the reason i mention this is because mr. schulman was a bush administration appointee and served as the commissioner of the irs from may of 2008 until october 6 months ago of 2012. so my question is who knew what when, would you not think since irs is agency of the that the
agency had should have brought the administration to the treasury department when he knew of it. should not he had done so? >> congressmen, i think that the first line of responsibility here is the irs commissioner. the irs commissioner is in day to day contact with the different irs and fixing any wrong in the irs is a fundamental part of the irs commissioner's job about making sure the system runs well. we are bringing in a new commissioner today and charging him with making sure we find out who is accountable. secondly what went wrong and making sure anything that needs to be fixed is fixed going forward.
>> estevan looks at where this goes, is a quote to the president? its import to show that this commissioner who was the commissioner during much of an investigation knew what was going on and testified before the senate committee yesterday that he did not take it to higher-ups. let me ask about basel iii if i may. >> it is important that i didn't know there was even an audit with the results until it was final. the president found out that the report became public. if there is any sense of political involvement in any way interfered with his investigation, that would be a real problem and it didn't happen. it's a good thing we did know about the investigation going on. >> let me ask you about basel iii if i may. what are the likely effects the differences of implementation
between the united states and other foreign jurisdictions of the derivatives credit valuation adjustment for capital requirement might have an american financial institutions in end users of derivative products. you share the concern of requirements and this is an issue that fsoc is reviewing? >> congressmen, we are concerned with basel iii and other areas of implementation of dodd-frank another rules that we do what we need to do to protect the u.s. economy from the risks we never want to see again, but also to work with partners to where we can harmonize standards and reach a level to competitive level playing field. we've made good progress. i have dirty been in any meetings with my counterpart with central bankers.
it's going to be a complicated undertaking. we have different legal systems, different standards. the thing we have to be clear about is our first obligation is to make sure we make the u.s. financial system sound and that we work with others to bernie sanders up. >> the chair recognizes the gentleman from florida, mr. posey. >> thank you, mr. chairman. mr. secretary, how bout with last on a term of the commissioner who saw? >> he was enacting commissioner. he is and how they actually departs a career employee, so there is not a term limit. >> had it not been for this event come you expect he would have been commissioner forever? >> there was a limit in terms of how long you could have the title. >> , remains on the timetable? >> because of the length of time it was sometime in june.
>> only a five minutes. >> if he would've remained in the position with all the authority afterwards, unless he resigned, which he did. >> i read your written testimony that said the strength of the financial system depends on the strength of our economy. you talk about sequester but it if you dry of urban economy. i think everyone is spending more money than you make doesn't do anything to inspire confidence either in budgets another balance doesn't do anything to inspire confidence either. in plain english, you might not live by crs if you ever get to talk to them. you mentioned job creation and economic growth have to be a top priority and next to obamacare, the big impediment right now seems to be the is an
overstepping of administrative rules than could ever be given to put in place. last of the treasury wrote a rule that would require all institutions to submit the names of all nonresident alien depositors. demarcated fenner said that could have an impact of $80 billion coming at the department of treasury never did a cost-benefit analysis required of every agency with an impact of shafting the public for $100 million. can we count on you to do a cost benefit analysis before the rule takes effect only a further financial harm to our country? >> congressmen, i'll have to get back to you on a specific rule and happy to do so. >> how long before you can get back to us because of that to stop this thing in its tracks as soon as possible. >> into an house must have been
involved in different matters. i will take a look and get back to you. >> any idea how long a ticket a look at it? >> i'll take a look at it and get back to you, congressman. >> i think in regard to mr. pearce's question and before that mr. campbell from california company said there's an awful white have to look into to answer mr. campbell's questions, or you didn't have any hesitation at all say there is no knowledge at the top about what is taking place. how do you make the distinction between the two answers? >> i can answer with great confidence on that. >> in answer to mr. pearce's question. in that nothing. deny everything and blame everybody until it over. i think that would be the proper answer to your question,
mr. pearce. >> attendance. i yelled back. >> the time has been noted that here the chair now recognizes the gentleman in texas, mr. crane. >> thank you, mr. chairman. i thank you and the ranking member for the hearing and the witness were appearing today and i also think that what is for making note of those who are fit comes in oklahoma. it is important that we not forget all the other things on our agenda. we should remember what is happening and i assure you at the appropriate time i will cast my vote for aid to the vic runs in oklahoma. i would also like to remind us that don't are king called to attention that some questions of politics and are popular.
you're not interceding in the audit may not have been faced, may not have been politics, may not be popular, but it was the right thing to do. you don't need validation when you're doing the right thing, mr. secretary. it was the right thing to do. this nifty page five of your testimony or your statement that she provided. on page five, you indicate under impact of fiscal policy to go on against future threats to our economy and financial stability, policymakers should avoid using last-minute resolution to fiscal policy matters such as debt ceiling and deficit reduction as a negotiating tactic. at that for you to elaborate on this because as you know we will
again confront a debt ceiling and deficit reduction question. would you elaborate on how this adverse impacts the economy getting make you indicated the economy needs confidence. the consumers need confidence. businesses need confidence. would you elaborate how this impacts the confidence factor? >> i'm happy to, congressman. in 2011 we had a series of crisis driven deadline driven negotiation that created a broad sense that there was this function in our government. i might confidence in the community of the united states and confidence amongst rating agencies. we saw for the first time a downgrade of the united states credit rating up because of our economic decision, but a political condition. i talked to people around the world in positions of authority.
it makes them very this assist in making financial economic policy decisions by the united states looks like it's in constant crisis. if you look at 2012, there was some progress made. we saw most of the brinksmanship in 2012 than we did 2011. we saw issues getting address and an attempt being made to avoid having that anxiety, which makes it harder for businesses to invest in for the economy to move. we have to stay on a path through to her business, what congress does its bit as. the president has made clear, congress has the responsibility to raise the debt limit. every bill, whether interest on treasury bill or payment for the event in a building, it's an obligation of the federal government. for entire history, the u.s. government has paid his
obligation. the way to control spending in the right to reduce the deficit is to make taxable policies and not to say we won't pay for those who party obligated. that's why congress needs to pass the debt limit. >> thank you. you talked about how we have to concern ourselves with stability in terms of the oversight council and i'd like for you to just explain briefly how important it is to maintain fsoc given you've made a comment about too big to fail and how you see too big to fail. would you comment on fsoc and how it will help us to maybe not eliminate, but keep taxpayers off the hook on to date to fill his shoes. >> congressmen, fsoc is a unique peer counselor. it has some areas of direct responsibility, but most are
coordinated role in his chair to pull together different actors in a quite complicated financial regulatory system to act in a decisive way in a coordinated way. these are areas of your five regulators in five different directions, it could cause massive confusion and a large burden. this analytic work being done i hope if cheryl plays a role to drive the process to a sensible decision making in. >> thank you, mr. chairman. high-heeled that. >> the chair recognizes gentleman from mystery, mr. luke meyer. >> thank you, mr. chairman. thank you, mr. lew. you wind up with a lot of the questions are dias before, so let me goes to some things of questions in my mind. >> i can't hear you because of
the door. >> one of the questions when you talk to your new commissioner and discuss with him his investigation is not only to have been investigated in regard to conservative folks, but also the quietest made by folks with regards to the pro-groups for not investigating those. i said she personally about 3000 documents and a request to investigate one. i said sharon last week to the investigation to take place three years ago and was never given anything but a stone wall over the last three years. this investigation should be broader than looking at conservative groups. should be looked at on the lack of action of investigating liberal groups. the oversight provided with regards to the site committees.
one of the questions that came up with regards to sifi designation in discussing the banking circles, the definition is concerning to that from a standpoint you made the comment also with regards to size company made the comment that perhaps the risk in activities you take should also be taken into consideration. do you have a preference and not when you look at the destination for banks with regards to something important, financial institutions, whether that should be a size or based on risk of activities engaged in. >> i think that size is one of the characteristics that suggest various, but certainly not the only one. you can have a large institution that is very well-capitalized and entirely safe. you can have a medium-size institution that plays a role in the financial marketplace that is far in excess of its size
increase our risk. it has to be a balanced approach. >> i appreciate that because that's the direction we need to go. following up on chairman has airlines questioned with the kinds of questions you should know to ask citizens with regards to compiling tax returns and investigating a database, are you intending to go through the types of questions on some of these forms to but a lot of unnecessary and intrusive questions with regards to getting the private lives of individuals? >> in terms of the facts we've seen with regard to this determination on five o. one c. threes, they went to nam except role-plays and we've made clear -- i've made clear we need to fix that. it's going to be the child of the irs commissioner to take the lead on that.
i fail so see in the report recommendations on things that happened to actually mind needs the threat or find a way to keep them in the future. for instance, the london situation. i fail to see where they promulgated any rules. with regard to the fed program, i see nothing that ever mentions that. at what point are you going support winding it down? are you going continue to support the quantititive program? my concern is that in response of some of your questions on these things you kept saying it needs time to do this and that. mr. secretary, it's like a doctor waiting for the cancer to take over the patient. if we don't start doing something pretty soon on some of the things. it's not going to happen at paul. >> briefly. >> briefly, mr. speaker. >> i think if you look at the look at and the rights. -- recommendation. it identifies the area they believe are the greatest risk. it lays out for the next year the things we should be looking
at. it should be an evolving list. take wholesale, fund, for example there's a lot of risk there. time for the gentleman expired. recognize the gentleman from minnesota. >> thank you, mr. mr. secretary. i want to make a comment. first of all, whenever you deal with institutions that involve human beings, things go wrong. something wrong with this situation. as a person who is, you know, probably on the liberal end of the political spectrum, i don't like the idea that somebody tea party people got more scrutiny. i just i want to even it. ly say this, the president denounced this you have publicly disapproved of it. there's an apology issued, which is shocking to me. you never see that. i think somebody ought to at least say there has been an
apology and the president's promise to make sure that steps will be put in place to not have have it happen again. i want to say that because i think that, you know, the truth is, you know, you can't take the politics out of politics. no doubt somebody is going to try to turn it in to, you know, election goal, no doubt. i think it should be our interests in this body to make sure that we make sure that if you are -- 401c4 organization you have a social welfare organization. if you're not, you cannot get that exemption. and there was more scrutiny on some of the tea party groups, but as i read the record and the press, they all got it. that doesn't excuse anything. it means to, to me, there are groups of various persuasions that are applying for this kind of exemption that shouldn't be getting it because they're not actually socially welfare. they are political in nature.
i hope you will make sure there's no political test, but in fact, anybody who is tbrail trying to election near shontd get this designation. i want to say that. >> i totally agree. there should be no bias. there should be an even standard. i'm not aware of any bias in favor of groups on the other side. if they were the case, it would be wrong. and there has to be an even handed unbiased and. >> that's right. and i want to say that you said you're going do something. i trust that you will. keep it up. i have a question in a particular nature, you know, the president obama east last three budget submission, the treasury department requested congress to enact legislation to provide permission for state and federal regulators of money, servicings of businesses to share information. are you aware that happened?
>> i'm general familiar with it, yes. i ask anonymous consent to enter to a budget request for fy2013, 2014. with no objection. last month mr. duffy and i fry wisconsin, my good friend from minnesota is no longer on the committee but on ways & means. i introduced the bill incorporates a request for president's fenced in budget. i'm eager to see the bill pass. i -- my hope is it increases availability of affordable remittances to people in somalia. i have large community from the reaming. we have 33,000 somali-americans. we want you to protect the public from people who inappropriately use the money wiring system. i believe that there's no better foreign aid than remittances;
right. i hope that treasury recommendation can recommend the bill and can help stream line the regular will story system. i want to add this, some parkingers in my district have told me the accumulation of regulation makes it expensive for them to facility the transactions. they want to facilitate. at the end of the day, you know, streamlining and consolidating would be helpful. if you -- [inaudible conversations] >> without objection they will be entered to the record. >> thank you. >> congressman, we we would hope to that some form of the pro-- are included in legislation getting that balance right is important. making sure we screen out payments that are for bad purposes for terrorist finance
purposes. critical. having a system in place that permits legitimate remittances and either state or federal law that ensures that would be very important. >> gentleman yields back. the recognize the gentleman from wisconsin. >> thank you. mr. secretary, thank you for being here today. when did you become aware that the allegation the irs was targeting conservative groups. when did you become aware that the targeting was going? >> i testified several times on this. i'm happy to do it again. i learned the fact of the investigation was underway on march 15. i did not know any details at this time. i became familiar with it -- [inaudible conversations] when it became public. >> i want do you -- you're aware of the scandal going on right now in washington about the irs targeting americans; right? you're aware of the
substantial. >> yes. i'm before testifying. >> e just answered your question. >> no you didn't. >> i first saw the report, a week ago . >> [inaudible conversations] i'm not talking about reports. >> i'm not talking about report. when did you become aware in your capacity as a chief or any other capacity that there was targeting going on of americans? i'm not asking about report. i'm not asking about the ig. when did you become aware that was targeting of americans from the irs? >> congressman, i have no facts that i was in possession of until . >> i didn't ask you this that. when did you become aware that the irs was targeting americans? i was notified march 15 that there was an investigation underway. i learned the friday before last. >> i'm not asking you about an investigation. >> last tuesday the ig report . >> mr. lew. i'm not asking about an
investigation. i don't care -- i know you found out about the ig investigation on march 15. everyone here knows that. that is not my question. my question is when did you learn that the irs was targeting different americans because of the political views? >> congressman, have no knowledge until the dates i'm describing. people can make all kinds of alleges. i have knowledge as of the decades i described. >> the first time that you heard about any targeting of americans by the irs was when you read the ig report. is that your testimony? >> congressman -- [inaudible] you're asking me what i knew. >> you didn't answer. you didn't answer my question. i'm asking a specific questions you dodged and our president dodged. i learned about the ig report on
this date. i'm not asking you or the president. i want to know when you learned that the irs was targeting americans. with when? >> i'm telling you when the facts were available to me. when can you learn about? i'm not asking about ig. when can you know the targeting was going on? >> you're not going like my answer. i learned about it when i learned about it. >> when if. >> i didn't know there was an investigation. >> i didn't ask about an investigation! [inaudible conversations] >> mr. chairman. [inaudible conversations] the gentleman of wisconsin. >> i would ask that the witness
not be badgered. >> i would ask the witness answer the question. >> i'm answering your question. >> no you're not. you're dodging me. because the bottom line is you knew before the ig report came out that the irs -- the time belongs to the gentleman from wisconsin. when. did. you. learn. that the irs was targeting americans? when if you learn -- [inaudible conversations] >> i have said so many times. it's unacceptable behavior i learned about it on march 15 there was an information with no facts. i learned the facts a week ago friday. then i saw the report. >> reclaim my time. it's evident that you knew before march 15th because you keep answering my question because you don't want to lie to congress that you knew about an
investigation. >> i learned about this in the dates i told you about. >> the americans were being targeted or ig report? >> congressman, i was not aware of any of these facts until the dates i told you about. >> time of the gentleman has expired. chair recognizes the gentleman from california, mr. sherman. >> mr. secretary, take a deep breathe. you have earned it. >> i'm fine. >> point to cuss on -- i want to focus on a different tax scandal contrary to what seems to be -- our failure to collect taxes from multinational corporations. apple computers just an apple on want to iceberg.
it appears as if they have less than 4% of the asset and sales and less than 4% of the payroll and the republican of island but somehow have 65% of the profits atrinted to the emerald island. that is damn effective tax accounting. never going to be able to tax multinational corporations, u.s. corporations that are earn money abroad are never going to be paying taxes in the united states. and we shouldn't even try. we want the profits repateuated. the other approach is -- i don't know the approach california took for many decades
would allow us to collect taxes on the appropriate percentage of worldwide income of all the molted national corporations that do business in the united states. i don't know if you have a comment on it. >> congressman, if i could comment briefly. when be-- laid out principle of tax reform last year, we try to address it is a way of addressing this issue, because what we would do is put a minimum tax in place so that
there is something of a hybrid system that you pay minimum tax. it's different than what you're describing. it's a system that california made optional. we face incredible pressure from the worldwide business community. the federal government is a little more influential in world business decisions. and this would be a system that would eliminate the 482 awe fit. would eliminate the shenanigans substantially increase the bestest i i know you spent at
lot of last year focusing on trying to produce $1.2 trillion from many sources over a ten-year period. as to the tax issue -- it's still underway. i might add. >> i understand is. >> as to the other tax issue that is being discussed here -- secret super pac can spend up unlimited amount of secret money influencing federal elections. they are subject to certain limitations. and i hope that we will enforce those limitations as a law requires no matter how politically difficult. whether a ship sinks out of negligence you might be incliented to fire the fleet of thed admiral of the fleet. the captain of the ship and the officer of the deck ought to have some affect on the career. do you need additionally
narrowly crafted tools so those presidential -- which is everybody but two can face appropriate personnel action for the mistakes made in the case? >> congressman, obviously the rules that governor the treatment of federal employees are the same for most agencies of government. only in the irs where you have a circumstance where the top managers are civil service. i'm happy -- [inaudible] one of the things i asked the new acting commissioner to do is look at questions structure organization issues to see if there changes we need. i don't want to jump to a conclusion not having the review. >> time of the gentleman is expired. the chair recognizes the gentleman from north carolina. >> thank you secretary lew. the service to our government. back to the irs question, we
i'm asking a question of what '02 answering. i heard the answers you have given prior to that. did you roadway or hear of the allegation that the irs was targeting conservative groups? >> i do not recall paying attention to this issue when i was -- . >> no. i understand paying attention is one thing. >> i don't -- i don't -- i did not -- i do not recall any articles that i read on the subject. >> so you don't recall -- . >> okay. okay. you don't recall anything. so therefore you couldn't pursue any allegations? >> if i don't recall having done it, obviously one has to have the -- if i can [inaudible conversations] >> let me answer the question. >> if i can take your -- . >> if i were aware of there
being something being investigated at this way, i would have stayed out as chief of staff. >> you would have stayed out of it. okay. you wouldn't have picked up the phone and called chicago and say, by the way, just to put out there, we're in a presidential election year, we have a scandal at at the irs. hold on! let me finish. you would have picked up the phone and say hey, it might be a political issue i don't know a presidential campaign debate. this is something kind of fairly -- with the campaign, i assume. to ask the question, is not absurd, sir. >> congressman, if wasn't aware and have no conversations at the time, you're creating an narrative that doesn't exist. >> okay. >> i want do you know that. it. >> you can -- did that on other issues as a good chief of staff. it's not new. >> congressman, they deal with many topics, with many people. you're asking me about a specific subject.
[inaudible] [inaudible conversations] my time is limited, sir. >> you should give me thirty stoakdz respond. >> sir, you haven't actually responded to any of the questions in a meaningful way. thirty seconds won't actually apparently mean anything because you're reciting the same line over and over again. while chief of staff did anyone at the white house or in the executive officer of the president suggest to the irs or treasury that irs should focus additional scrutiny on the application of conservative groups? >> i'm not -- not that i'm aware of it. >> we're asking them to certainly understand where things stand. why are chief of staff -- did anyone in the white house meet with or any way communicate with members of congress regarding these letters members of congress sent on the left to say target conservative groups on the right raising concerns about the targeting conservative groups?
>> not i'm aware of. >> okay. to remind you, sir, in march of 2012, the associated press an "the new york times" ran stories about this allegation, your then, chief of staff at the white house, and is it your testimony here today that you were never aware of those allegations raised in those two news organizations? >> i already testified. i have no rex of it. >> okay. so when commissioner shulman of the irs testified before congress in march of 2012, and these questions were posed to him, he said, quote, there's been a lot of press about that. and your testimony today is as white house chief of staff you didn't know about it. the final question i have for you -- [inaudible conversations] >> congressman, if you give me thirty seconds i think i deserve to respond, it would be inappropriate -- [inaudible conversations] >> i ask unanimous consent that the gentleman have thirty sengdz.
-- seconds. so understand democrats are objecting to their witness. >> the time of the gentleman has expired, and the chair will take the liberty of without objection offering our witness thirty seconds to comment. >> thank you, mr. chairman. >> gentleman has objected. chair recognizes the gentleman from massachusetts, lynch. thank you for becoming before the committee. why don't i yield your thirty seconds and you can finish your answer. >> thank you, congressman. you know, i think the fundamental issue here there's a separation enforcement administration of our tax system so supposed to be insulated from political involvement. it would be inappropriate as a white house chief of staff as secretary of the treasury, to try to put any political pressure on our tax system. i never did, i never would. and that's why i didn't pay an
awful lot of attention to questions of the administration of our tax system because it wasn't something that i would have intervened in. there's intentionally a separation so that the tax system will not be biased, and i think that what the president made clear, what i have made clear, the behavior is unacceptable, we have to find out the facts, we are to take action people need to be held accountable and make sure it never happens again. let's not get to a world where we start having a white house jump to the administration of our tax system because that will be a cure well worth the disease. >> i thank you. and in fairness, you know, i just think that the circumstances here are sort of politicized in any way when the irs is conceded the fact they did use political terms such as "tea party" and "patriot" and any group critical of the house -- how the government is being run. those are were standards they were using.
so i guess the circumstances sort of invites this type of accusation. but i accept and i agree with your answer, mr. secretary. again. i would like to ask you more about what we have been doing in the committee. two weeks ago, the committee passed a set of bills amending title vii of dodd-frank, and i believe those provisions significantly undermine the hard cord reform of the counter derivative market we achieved in dodd-frank. ago, a report earlier this year estimated the cost of the financial crisis was about $22 trillion, and that the opaque and largely unregulated derivety market was at the heart of the crisis. not even five years after the dark days, we're in this committee -- i believe -- planting the seeds for the next crisis. before any of the regulations
mandated under dodd-frank to reform the derivative market has been finalized, the committee has pass what are being called technical fixed bills to prevent both reforms from ever happening. i read last week that former janice -- chairman talk about the original pushout section of 7.16, and mr. secretary, i know you sent a letter prior to the committee's markup of the bill urging us not to advance that legislation calling it premature, disruptive, and harmful to the implementation of key derivative reform. can you explain to this committee why the bills, in your opinion, are destructive to our economy and to meaningful wall street reforms? >> congressman, i think it's very important for the regulators who have been given authority to implement these provisions, and for that process
to be completed. many of the concerns -- some of the concerns that are raised in the legislation actually are going to be addressed, as i understand it, as these rules are forthcoming. not necessarily all, but the legislation is premature because we haven't yet had the opportunity to complete the process. you know, for the first two years of dodd-frank's history, the fight was should it be repealed or should it be implemented? it slowed down the implementation process, and then at the end of two years there were, you know, concerns that there was uncertainty because the rules were not yet in place. our first responsibility now is to make sure we get all the rules in place, we get that certainty. i think we're not at the point where the financial industry actually would like us to complete the regulations. they're not in the place they were in fighting for repeal. we need to finish the work. and i'm committed in with regard to the entire implementation of dodd-frank to young really keeping the pressure on all of the different parties, as
chairman of f sock -- fsoc. i can't say exactly what the process will be completed. we're moving, and we're well on our way and we're going to make a lot more progress this year. >> i see my time is just about expired. i yield back. >> time of the gentleman was about to expire. the time of -- the chair now yields to the gentleman from michigan. >> i appreciate that, mr. chairman, and chairman i appreciate you being here and maybe we can use slightly different section of the briefing book or maybe the briefing book at all i have a few other issues. but i do -- i'm hearing -- i was hearing your answer to my colleague about implementation, and the uncertainty being out there. i have to tell you, i don't buy it. it's pretty clear that the administration would veto any attempt that is much as i might
desire eliminating dodd-frank and starting over and fixing in a different way. it seems to me that this administration would be pretty clear on a veto message on that and how in the world it would stop you all from implementing the rules. i would say that it's probably because this monster is so massive, and has so many problems with it, that you have realized that you can't go and implement it the way it's currently written. frankly, two weeks ago we nine bills that moved through. all but one in a bipartisan fashion fixing derivative. last year i had a bill signed in to law by the president that was fixing an issue with the cfpb and privacy, we have got a myriad of other bills that are going in to go in. we had a hearing on conflict mineral and some of the issues and problems that are there. these are bipartisan fixes trying to address this problem, and i'll note that you sent a
letter opposing all nine of those bills that we passed in eight of the nine passed on a bipartisan fashion. how can you blame congress or one side of the aisle or the other for a lack of progress, it seems to be a stretch to me, and, you know, you mentioned on -- you got asked earlier about it. and your quote -- i wrote it down. it was a tremendous violation of trust, and i think you're sensing a lot of frustration, not just up here, but in the general public, there is feeling and frustration that there is not trust and that things have been politicized in the budget process, in the regulatory system. i have a specific one that came to light to me, which i thought was interesting. omb -- i know former maybe not under the current. please give me insight, if you could, they decided that sipc
all the other regulatory advisers and those kinds of things, they are subject to sequester. well, under section 109 it disstingtly says that these are not federal dollars. these are user fees that are coming in, and fees that are paid in to these organizations, and the frustration it seems like every time the administration has come to a fork in the road, and the one direction is making some tough difficult decisions. i understand it. ..
>> has been silence in what direction we are going to go from the gac. that, in my mind, it needs to change. i hope to take 15 seconds to address that in what we are going to do. >> i don't know that i can do it and nine seconds. but we look forward to making progress. >> how can you claim you have been working with us we have a man? >> okay, we are saved by the bell. >> the chair is curious. the time has expired for the gentleman. i wish to alert our members that the agreement with the secretary's schedule, i believe we will be able to clear or more members and then we will excuse the secretary. the gentleman from colorado is recognized. >> thank you, mr. chair. i thank you, jack lu, for being
here. used a lot cooler under fire than i was just a moment ago. i would like to thank my friend, mr. lynch, for bringing me 30 seconds to explain their position. >> i think this committee is better than the battering that i have seen you undertake. >> okay, let's just talk, since we talked so much before. i think we need to read what the feds. it says an organization described in section crd shall be exempt from taxation under this subtitle. this is 501. the section is denied and we come down and pacific leagues were organizations not organized for profit, but operated exclusively for the promotion of social welfare. local associations and employees, never ship that is
limited in the designated person or persons in a particular municipality. the earnings of which are devoted exclusively to charitable education and recreational purposes. so the irs has an obligation. to look at exemptions that people request. most people are paying their taxes. most americans or other paying their taxes. there are certain people that seek exemptions under the 501 c-4. they are scrutinized, they have to be scrutinized. there was an article this weekend in the denver post that for the colorado conservative group believed to be targeted by the internal revenue service is operating without any tax exempt status except more than $1 million against democrats.
these are funds for political operations that provide anonymity to their owners. with that comes a lack of accountability. the irs, in my opinion, whether it's this or some other kind of exemption has the responsibility on behalf of the taxpayers look at these things. doing it impartially come, that is much of what the conversation was about. but specifically here, when it talks about civic leagues were organizations, operated exclusively for the politicization of social welfare. despite all of this is that we are in right now, sir, i would ask the irs continue to look at these particular exemptions. so that is my point on. i think one of the reasons we are so off on the subject is because barack obama took office in the stock market bubble, unemployment has dropped.
>> a bill that republicans are pushing prioritizes the deck. it is something that we have equally. now they want to start prioritizing, which it, which means that we are not going to pay somebody. i hope, mr. secretary, under your watch, that we pay everyone and i would like you to comment on that bill. >> i could not agree more. there is no distinction between defaulting on one or another. if you are in the fall, you are in default. prioritization doesn't solve that problem. you need to set the debt limit. >> thank you. >> the chair recognizes the
gentleman from new york. >> thank you, chairman. thank you, secretary for being here today. it has been a bit contentious. i know it's not an easy day for you. i'm going to start with going back to mount pleasant area and then i will move on. >> i spoke with lois lerner. i met with george several weeks ago.
>> on march 15, i was informed that there was an audit underway. so i spoke with him about it then. there were a number of pending matters committee did not give any details. i did not know in what way. i have not spoken with him. haven't spoken with him since. >> thank you see that you have clearly testified that he didn't want to get involved in an investigation. what the president finding out, in retrospect, again, not saying that you have to take action, but do you think that you should have been notified that there was a problem? >> congressman from i really believe that in a matter like
this, the general practice is the right one. which is the secretary is not as brought into the conversation on the ig report. the report goes through this direction. >> prior to this, wasn't there an internal investigation? at the erez? >> well, there has not been anything but something like this arises, you would want to be notified? meant just to be clear, i didn't that the general matter, the treasury secretary needs to have this ability of the general management of the irs. the treasury secretary paul into
the of the reasons does not intervene in the administrations of the tax system. so there is a fine line there, and i think are important to honor that. with political reasons, it is very fine line. >> i think we're going to have to work our way through with an agency like the irs has identical balance between parties and independents.
>> and is asking about the policy. i'm not saying whether it is good or bad. i'm asking what you posted it to be not you have new information. in light of which have happened. what would your policy be? >> it would be to hold the irs accountable and make sure that the irs holds people accountable for their behavior. to make sure that we find out what happens here in terms of the breakdown and the irs and we look to see whether there are systemic problems. i will work with the new commissioner to make sure that i have visibility to that which is appropriate. and i will stop short of intervening and your vision is different than knowledge. i am thinking about floating variable-rate notes. i have a big problem with that. if that true? at that the treasury is considering putting these variable-rate notes? we met well, i just want to
doublecheck that. this is a proposal for several weeks ago. >> okay, let's turn again. the chair recognizes the gentleman from delaware. >> thank you, mr. chairman. thank you for having this hearing today. thank you mr. secretary for coming in and your answers to the questions. i'm going to try to focus what you said at the state level, one whose responsibilities include tax administration. i would certainly appreciate your hands on approach and understand why it is necessary for a political appointee like where i served. i would like to ask a few questions about your role. the first one is, we hear a lot in this committee. we hear from folks on the other side of the aisle.
but too big to fail still exist. what would you tell folks that say that? >> congressman, i think that the challenge we have is to get the information of the entrée can answer that question by saying that it is too big to fail and it is over. the policy of that is the case. it is our terms and we are not yet at the finish line. so i think that there is a challenge if you take a snapshot today look ahead. i think you if you look at the debate that is taking place over the last number of months, there are different approaches to what additional actions are needed. there is authority in dodd-frank to turn a number of tiles to different levels. in terms of leverage requirements. until that process is complete, you know, it is going to be a little bit challenging to enter it in the present tense. i hope the answer can be that too big to fail is over.
>> are former chair and ranking member, mr. frank, he would argue that orderly liquidation -- >> and makes the so we don't have the authority to do it. >> the second question i would like to ask is about the housing finance reform and to report talks about allowing the gse twined down into try to encourage a more private capital into the mortgage market. a few weeks ago we had a presentation by jim milstein, who has worked on the details of that. and we have committed presented a hearing about this that prescribed at a very high level, three options. he has put meat the meat on the bones on what was the options of this and what is a limited federal that guarantees reinsurance.
have you seen that proposal? and if you have, what do you think of that? >> we are in a ongoing process of working through what the next steps should be. we welcome the contribution. >> i would love to see your analysis of that and the concerns and issues that are raised by very intriguing topics to me. >> we have what it is is conducting the place where they fell back on this and created a financial crisis demand that was exactly his advice.
more than 90% of mortgages are being part of this. >> yes. >> lastly, i sent a letter that encouraged the treasury to be a little bit more aggressive with foreclosure prevention programs that you have. our local officials have been very effective in helping keep people in their homes. i would just encourage you to do that. i'm have to read in the blood or gore talked your staff about it. especially on your approach to foreclosure prevention. >> congressman, i think that we need to do the best we can come we have a lot more to do. it has done a lot of good directly. also indirectly, it has created
practices the private sector has stepped into. so many homeowners are part of this financial restructure. we have more to do. and we have to take advantage of this time when interest rates are low to make as much progress as we can. >> thank you very much are you i look forward forward to hearing about it. >> last member to be recognized as a gentleman from india. >> thank you, mr. chairman. thank you for being here today. i do want to just make a statement and i have another question. but this audit of the irs started over a year ago red and you are the chief of staff at the time. i hope that you will give us confidence as we move through and more details come out that as the leadership of the white
house, but this is one of the biggest scandal is that the irs is dealing with it you should have known about it. leadership expects to know about these things. and if you say that you only knew of the facts on march 15, i hope that you are asked the people below you why did i not know about this. i read in a report you said you are outraged when he heard of the facts. this is the biggest scam of this administration is facing, you should be outraged and i hope that somebody below you is going to face the consequences. because leadership should really step up and find out why i do not. now, i would like to talk a little bit about what we see on the wall here. the debt clock read on march 13, the president said that we don't have an immediate crisis in terms of debt. for the next 10 years, it's going to be in a sustainable
place. under president obama's budget proposal, can you tell me how long it will be until the budget balances? >> it balances the tenure window. i don't think that's what he meant when he said he is able ways. it is a part of gdp back into a sustainable range. if anything, we are overachieving the deficit reduction where we are in the current year and the goal should not be to balance the budget right now. but to be honest that. >> you know, i don't think that looking towards you is what is most significant. i think that the papillion is most significant. >> for my 11 and 7-year-old, one can expect the federal government got budget? >> i think that the test is how we build an economy for the
future. i'll be running a fiscal policies that we have a debt that is stable. and are we addressing things in a fair and balanced way reign. >> i think that we should have a fair mix of closing to give us the fair and balanced way, to be on a in a long-term pact with sustainability. >> we have already raised taxes that i want to talk about what really is holding up the economy. that is the health care law. as i talked around in northeast indiana, they consistently say that i don't have any certainty. i don't know what's going on. this please write back into the irs issue. because the irs is going to be one of the main agencies of administering the health care law. is that correct? >> is one of many agencies. but hhs is the main agencies. >> do you think that the
confidence level of the american people and the irs as they administer this and start roll out, that it's going to be increased at all? >> i have said over and over again that it is a top priority. we are committed to doing this. >> did you know ms. ingram? >> she was the head of the taxes in the office during what we understand to be the targeting of americans. now she is the head. i don't know how you don't know her, she's the head of the health care law. >> typically i deal with treasury staff deal with others. but if i can just correct the fact that you just described. my understanding and the fact of the matter, we have to make sure the facts are correct. the time when awareness and
problems became known, was working on the portal care remixer you know of her i know of are, of course. >> you think would be appropriate for her to continue work to remain in the position that she is as the head of the health care rollout? the fact that she was not in a position, taking day-to-day responsibility for the time in question. the question is, is she doing her job on the portal tracked effectively to in the new acting commissioner will take over day-to-day and i am sure that we will look at that and i can tell you that the american people are not trusting this administration right now. >> the time for the gentleman has expired. i would like to thank the secretary. all members will have five legislative days to submit additional questions to the chair. i would ask our witnesses to respond as promptly as you are
able to. without objection, members last how to submit materials for inclusion in the record. before returning, mr. ross is transferred to the subcommittee on housing and insurance. the subcommittee on financial institutions and consumer credit stands adjourned. [inaudible conversations] >> president obama's nomination includes a confirmation hearing tomorrow morning. a philanthropist and former business executive is featured. it's it struck at 11:00 p.m. eastern on this entry. >> this is the way it looked
during james garfield's 1880 campaign. this is the formal party room. james and his wife and the lot of time to fix them with their children. they would close the doors, their children would stay here. they lost two children to infancy. allies and isabella and edward are all children have the benefit of having two very intelligent parents who strongly believe in education. very important to james and his wife. the family was hit by a fire. they reach one another and that was one of their favorite activities was to read what to one another. the piece is very interesting. mrs. garfield absolutely adored
her time. >> many people think it is artistic. she is also very intelligent. >> a conversation on this is now available on our website. c-span.org/first ladies. and tune in on monday for next program. >> we are going to a conference committee. chairman ben bernanke takes up this argument and that follows the u.s. senate budget debate.
>> we were all here to pass the regular budgetary orders in four years. it was a full and open process with numerous amendments. on the floor with over 100 amendments voted on over 70 past. it is now past time. plus, getting a budget conference process and this will enable the senate to return to normal budgetary order. it is what our borders, both democratic and republican, and all of our state expect us to do to have a meaningful conference about the budget with the house. good news is that we are seeing recent examples of normal order and compromising his body [inaudible] in march, the marketplace fairness bill we had been
searching for a solution for 15 to 20 years, always involves significant processes and significant here on the floor. it is up to this body to show the public that we don't just embrace regular order and normal processes on these important issues. but that we also embrace them on something it's critically important that the federal budget. for that reason, madam president, i would ask unanimous consent that the senate proceed to the consideration of calendar item 33. the amendment which is on the has the senate resolution -- the budget resolution passed by the senate.
would it not be in order for the senate to consider a report that includes instructions to raise the debt limit. the reason i make that is because i do respect people tremendously. i want to congratulate the judiciary committee in regard to the bill which will help us in the process of having a better product. this issue of the debt limit is an extraordinary measure. that is why would ask the senator to modify his request. >> would the senator modify this request? >> i do not agree with the modification. i think that would be modifying the budget that was passed. >> the objection is heard. >> madam president? >> is there objection to the original request? >> the objection is